What are the
challenges facing SMEs when they embark on IT-lization? What and how must they
prepare for implementing an ERP/MRP Systems?
This article hopes to bring a balance and try not to be too
technical, although some technical terms may invariably be needed and used in
the discussion on the successful implementation of a Manufacturing
Software. Manufacturing Information
System, which uses the computer process to integrate various modules such as
Inventory management, Bill of material, Production Scheduling, Material
Requirement planning, should also integrate with the accounting systems of the
company.
Very often, the
implementation of a Manufacturing System is led and dominated by members of the
MIS department with users performing a "back seat" functions.
While the MIS
department provides the technical support in the implementation, the project
should be driven by the users. In this manner, the users assume ownership and
therefore the commitment for the entire project.
Ingredient for
Successful Manufacturing Accounting implementation
* Top Management
Commitment.
* Lower Management
Co-operation.
* Involvement of the
Account dept, Production dept and Sales/Distribution dept.
* Co-operation of
every dept to product accurate and
reliable Inventory data.
* Setting up accurate
Bill of Material from the organized inventory data.
* Realistic goals of
the Software.
Experience has shown that the successful organizations are
those who have addressed a much wider range of issues other than just hardware
and software. These organizations have defined at the outset how the system
would be applied to gain maximum advantage.
They then
systematically tackle all the technical and non-technical issues, involving
people, organization, working practices, and physical layout, and establish an
appropriate environment to support the system.
A successfully
implementation invariably reflects the organization's ability to manage change
and early recognition that it involves much more than installing computer
systems and effective pre-planning.
So, why isn't
everybody successfully employing Manufacturing Information System. What has
differentiated those organizations that have achieved substantial benefit from
ERP/MRP from those who have not? The answer is simply, "It's not
easy!"
You may not get it
right the first time. There is nothing wrong or shameful about it. You can
always try again.
Phase 1 - Preparation
This first phase is
aimed at developing understanding of how ERP/MRP should be applied and
identifying changes that are required to support the formal ERP/MRP
environment.
It involves carrying
out a diagnostic review of the functional areas of the organization to assess
current strengths and weaknesses. Based upon the diagnostic findings, the next
step is to prepare a systematic procedure of control. The next task is to
define the improvement projects, which must be undertaken in order to correct the
deficiencies, identified above. These may cover system development, procedural
reorganization and data establishment work. Priorities are assigned to the
various projects based on the assessment of business benefits and the
seriousness of the problems identified in the diagnostic profiles.
In summary, a new way
of working designed to correct current planning and control deficiencies and
meeting the business objectives has to be kept in mind.
Phase 2 - Software
and Database Selection
The choice of software and database is important. The
company's approach to the selection is software-led. There are now numerous
approaches to control the manufacturing process.
The Manufacturing
Accounting Approach.
- Manufacturing
Inventory
- Manufacturing Purchase Order {sub -
system}
- Bills Of Material / WIP {sub -
system}
- Time Phrased Production Scheduling
{sub - system}
- Material Require Planning / Production
Work Order {sub - system}
- Manufacturing Tools {sub - system}
- Work Centre capacity {sub-system}
- BOM Routings / Quality Control {sub
- system}
- General Ledger And Financial Reports
- Sales Inventory Control And Analysis
- Accounts Payable / Accounts Receivable
- Order Entry / Sales Analysis
- Assets
Management / Plant & Machines maintenance
-
Reporting Tools / Document Management
- Operating system / Databases &
Deployment method.
A comparison of ERP
software would determine which is more suited for each particular case or
needs.
In selecting
software, emphasis must be given to those features that support the essential
operating practices. If the software does not incorporate these key features,
the implementation will inevitably be complex and tedious.
There are several
other factors which will influence the final selection, such as cost, track
record, local support, database design, report writer facility, documentation,
integration to the accounting system, Hardware requirements and installed base.
All these factors will be weighted according to their level of importance in
the final consideration of the most appropriate solution.
Depending on your requirement and budget, you will select
the combination of equipment and software to achieve the specific result that
you desire.
Ideally the Software
should be modular in design so that the SMEs may buy what is needed now. And
will be able to add Modules and functionalities as and when they are ready and
required. This will help SMEs to plan and
managed the finance and implementations readiness of its organization.
Phase 3 - Design, Training and Implementation
* Design
Once the software is
selected, further skills are required to apply it correctly to the operating
environment. The best software is one that offers power with ease of use.
Occasionally there
may be a need for customization of reports to presents each company
manufacturing accounts.
The principal issues
addressed during the course of this design phase are as follows:
# Specific plan to
integrate Manufacturing Information to Accounting System. It will integrate
with the Financial Accounting System. A thorough discussion and consultation
with the Financial Controller/Accountant to design charts of accounts, decision
on accounting codes and feeds for implementation of a manufacturing accounting
system.
# Specific
application of the system in the company environment. This involves structuring
the bill of material, defining the usage of the data fields and the software
functions and features; establishing data recording and updating
procedures/inquiry usage; and defining the use of the customizing parameters,
etc.
# Definition of the
control and security requirements;
# Specification of
all necessary vertical add-on and enhancement to the software;
# Finalization of the
system conversion and implementation plans.
* Training
An essential element
of Manufacturing System implementation is education and training. People most
understand the principles of MRP/Accounting, how they influence the system and
what they must do and when.
The training should
be extended to the majority of people in the organization, involving the
marketing and finance personnel in addition to those from manufacturing.
* Implementation
Experience had shown
that ERP/Manufacturing systems frequently do not match initial expectations
because of difficulties in the he user areas. Prior to applying ERP/MRP
principles, most companies rely on informal recording, reporting and expediting
procedures to coordinate manufacturing activities.
By contrast, ERP/MRP
imposes disciplines and formal controls. Developing this change in the approach
and attitude is often the most difficult implementation task.
Our approach to
implementation covers two main aspects. Principally the user related and data
processing aspects. The user-related aspects include the following areas:
Improvement projects
- In the user-related areas, the implementation program starts with the
improvement projects mapped out in the diagnostic phase. These are designed
primarily to correct procedural weaknesses and establish accurate data.
Typical projects
would include inventory accuracy improvements (physical storage arrangements,
recording, cycle counting, etc), engineering change control improvements, and
database accuracy Improvements, and
simple shop floor work-in progress control, etc; Policies and procedural
definition and documentation - In this area, We assists management to define
and document the policies and other issues arising from the new way for working
in the company.
We also work with
users to establish and document simple, effective operating procedures to
support the computer system;
Problem Solving - The Company works with users to solve
implementation problems and design issues that inevitably arise during the
implementation.
Phase 4 - Post
implementation
Getting the system up
and running is not the final step. 'Closing the loop' is not easy and a program
for continuous improvement musts be developed. A software maintenance contract
should be signed for troubleshooting and when necessary retraining of staff
should be done. Continuous update on software enhancement should be provided by
vendor.
As can be seen from
the above, the successful implementation of the ERP/Manufacturing Information
System requires much effort with proper planning, control procedure, charts of
accounts, products code, accurate inventory data to build accurate BOM, and
last but not lease the co-operation of every department involve.
Even if you were to
achieve only 85-90% success you will still benefit from your investment. Never
feel that this is a failure. You may try again to achieve greater success in
the not too far distant future.
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To learn all about Sage 300c ERP solutions contact CAREWARE Account
Manager today by calling (03) 27143855 or by emailing sales@careware.com.my There are
multiple licensing options; one is sure to be a perfect fit for your company
budget. Website: www.careware.com.my
